A general resource for employees and management alike, covering issues old and new in the law of Ontario employment relationships.

Friday, July 20, 2012

You're fired! No, I quit!

Every so often, you run into a case where an employee was planning to leave anyways, but was fired first. Or where an employer gives notice of termination, and the employee resigns before the notice runs out.

What happens in such a case? Can an employee still sue for reasonable notice if he quits - or was planning to quit - before being fired?

Often, in such a scenario, the employee's rights will be limited. Let's start with the first scenario, where an employee was planning to leave, but was fired first.

Scenario #1

Conceptually, in a usual wrongful dismissal action, an employee is entitled to be compensated on the basis of what would have happened but for the employer's failure to give notice. In other words, the judge looks into his crystal ball and sees what would have happened moving forward, and if the employee was going to quit soon, the judge will see that, and the damages will be limited. Of course, a judge doesn't really have a crystal ball - just the evidence before the Court - and while an employee's intention to quit is going to be relevant to damages, it isn't going to change the fact that it was ultimately the employer who breached the contract.

In reality, what is going to be much more important is why the employee was planning to quit. Let's say the relationship has been going south for a while and the environment has just deteriorated to the point that I can't be there anymore. The fact that I was going to quit may be less relevant, because I'd still be able to frame such a resignation, perhaps, as a constructive dismissal.

On the other hand, if the reason I was going to quit is that I had landed a new job, then I have a bigger problem: Mitigation earnings. So it's early August, I line up a job to start at the beginning of September, and I'm planning to give my employer three weeks' notice, but I get fired first. I'll probably be entitled to those three weeks (subject to contractual/common law doctrines), but even if I sue for pay through the whole reasonable notice period, the employer's full answer will be that I had a new job starting in September, and my earnings from the new job will be backed out of the old employer's obligations to compensate me.

Scenario #2
What happens if the employer gives me some actual notice, and I quit partway through? Suppose for example that I've been with my employer for ten years, and I get 8 weeks' notice, and then put in my own notice of resignation.

Once again, the question is why I resigned. Is it simply because I can't be there anymore knowing that I'm so unappreciated that I'm being fired? The fact alone of having been given notice won't be enough. Coupled, however, with other adverse treatment, it might be argued to constitute a constructive dismissal, which means that I could still seek pay in lieu of notice despite having resigned.

Or maybe I found a new job quickly? Unusual, but it does happen, and again, there's the mitigation problem, as above. I can't sue my employer for money I made elsewhere.

The Exceptions
It's law, right? There are always exceptions. And exceptions to the exceptions. So on.

The duty to mitigate isn't universal. In particular, statutory minimums are not subject to the duty to mitigate. For the sake of the example, suppose I have ten years of service with an employer who meets the criteria for being required to pay statutory severance. If they fire me, the stat minimum is 8 weeks' notice or pay in lieu thereof and an additional 10 weeks' severance pay.

So if I'm fired without notice, then it doesn't matter if I was planning to quit the next day without notice, or if I get a job immediately afterwards; I am automatically entitled to the full 18 weeks' pay.

Likewise, if I'm given my 8 weeks' actual notice, and I quit during that notice period, then I will still be entitled to my 10 weeks' severance pay, provided that I gave the employer at least two weeks' notice of resignation.

Having a new job, I may not have any additional entitlements at common law, but the stat minimums can be helpful, especially for long-service employees. It can be a nice little windfall.

Similarly, following the recent Ontario Court of Appeal decision in Bowes v. Goss Power Products Ltd., people with employment contracts entitling them to a fixed period of notice or pay in lieu thereof will be treated the same way. If I'm contractually entitled to six months' notice or pay in lieu, and I get fired, then - again - it doesn't matter if I already have a job lined up to start the next day and had a not-too-polite resignation letter in hand when going into the termination meeting, if they beat me to the punch and fire me, I get to chase the whole six months.

Naturally, that analysis doesn't apply to "just cause" terminations - it's never a good idea to just go and get yourself fired intentionally.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.